Uber Loses Early Battle to Lyft Over Fake Ride Dirty Trick Claims

Arbitration requirements by tech upstarts are an insult to their users — both drivers and passengers alike.

— Jason Clampet

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While Uber Technologies Inc. fights to keep its own drivers out of court with their grievances, it can’t force arbitration on Lyft Inc. drivers who accuse the ride-hailing behemoth of dirty tricks.

Uber will have to confront a lawsuit accusing it of creating fake Lyft accounts to lure its smaller rival’s drivers to phony ride requests the old-fashioned way — in a public courthouse.

Ryan Smythe claims that he and hundreds of fellow Lyft drivers in California were sabotaged by Uber drivers using disposable cell phones for the fake rides scheme, as part of Uber’s Operation SLOG, a driver recruitment initiative that first drew criticism two years ago. Smythe added new details Thursday to a complaint he filed in May following last week’s ruling by a San Francisco state judge blocking Uber’s effort to move the dispute into closed-door arbitration proceedings.

“Uber Technologies Inc. did this to discourage Lyft drivers from contracting with Lyft, to deprive the marketplace of Lyft drivers so that Uber drivers would benefit, and to create a higher wait time for Lyft customers in order to steer their patronage to Uber,” Smythe said in the revised complaint.

Uber has taken a more aggressive stance in its highest profile driver lawsuit after appeals court deliberations in June made the company more confident in its ability to enforce arbitration clauses in its contracts and block drivers from suing.

Class Action

Like many drivers, Smythe used both Lyft and Uber apps to find rides, which led Uber to attempt to force his claims into private arbitration, one driver at a time, instead of court where he’s seeking to proceed with class-action status. San Francisco Superior Court Judge Mary E. Wiss shut down Uber’s bid.

Smythe’s claims “fall outside the scope of the arbitration agreement,” Wiss wrote in an Aug. 25 ruling. His lawsuit “is directly tied to his separate role as Lyft driver and the harm he allegedly suffered in that capacity.”

Last month a federal judge in San Francisco rejected Uber’s $100 million settlement with drivers, which may reignite a dozen or so lawsuits that would have been silenced by the agreement. Legal experts have said that because those other cases are in state court, they won’t be bound by Uber winning a favorable ruling on its arbitration clause from the federal appeals court.